A guide to eCommerce supply chain management
Today, eCommerce has become much more than just a way to trade online. It has successfully bridged the gap between buyers and sellers, making them more connected. Buyers now have the option to place orders from their favorite sellers in just a few clicks. To cater to such buyers, sellers are crowding in global eCommerce marketplaces like Amazon, Flipkart, etc., instead of starting their own website. The biggest challenge that they face is managing the supply chain effectively.
A supply chain is rightly called the heart of any eCommerce system. An effective supply chain management will help expand your target audience, thus accelerating your business. In this post, we will look into the supply chain’s role in an eCommerce system and how to make it more efficient. Before that, let’s understand what supply chain management is.
What is supply chain management?
Supply chain management is the underpinning structure that covers a wholesome portion of any eCommerce business. Supply chain management involves ensuring faster production rates at lower costs. An eCommerce supply chain typically consists of -
Purchase of raw materials
Manufacturing of products
Distribution and shipping to the customer
You need to manage all these aspects efficiently to satisfy customers’ expectations. In short, you need to manage the entire journey of the products. Here is an interesting fact: About 79% of the companies with high-performing supply chains manage to garner higher revenues than others. This clearly shows the importance of supply chain management in the growth of your business.
Five tools that are an inherent part of a good supply chain management
Shipping Status Tools: These tools help you to keep track of your shipment. A good SCM will offer real-time shipping updates through these tools.
Order Processing Tools: These tools help you keep track of every aspect of an order, from billing to order fulfillment. With these tools, you will always stay on top of your order.
Lean Inventory Tools: These tools help you prevent the production of excess goods and produce them only when needed. JIT(Just in Time) is a popular lean inventory tool.
Supplier Management Tools: These tools help you keep track of the suppliers and how they impact your business. With these data, you can renegotiate supplier terms or even change suppliers if things are going downhill.
Analytics and Reporting Tools: These tools help you convert the collected information into a format that management can understand and take actions.
Key challenges that e-tailers face in logistics and supply chain management
1. Meeting customer expectations
Today, customers are more insistent on getting quality products at lower prices on time. Availability of goods through multiple channels, 24X7 customer support, and timely delivery is what the customers are seeking today. For example, a survey points out that 56% of online consumers between the age of 18-34 expect the product to be delivered on the same day. Also, 40% of customers do not hesitate to cancel their orders once the delivery is late. Unfortunately, e-tailers struggle to meet such requirements because they are prone to supply risk and can never predict the demand for a product at any time. They are often unable to ship products to customers scattered across multiple markets and boundaries on time.
2. Operational inefficiencies
Achieving operational efficiency in the eCommerce business is not easy. Businesses lack visibility across different departments due to various critical information not extending across these units. Most eCommerce businesses avoid ERP systems to save costs and instead rely on conventional spreadsheets. As a result, they cannot keep up with regular operations.
3. Omnichannel integration
When it comes to online shopping, customers want the luxury of multiple channels to purchase from. Unfortunately, logistics management in multiple channels is an absolute nightmare. You will not only incur high costs but can lead to a poor customer experience when you are short of manpower to handle so many channels.
How can an efficient supply chain resolve the challenges faced by e-tailers?
Supply chain management is nothing short of art that the retailers have to master to optimise their business operations. An efficient supply chain management is capable of easily solving the above challenges by integrating all the three aspects of eCommerce - manufacturing, shipping and customer service into one single connective process. Here are the three ways in which good supply chain management can help e-tailers -
It helps to streamline your inventory and adopt the latest technologies easily. It does so by identifying the key areas where you could use software solutions to optimise operations.
It helps to maintain healthy supplier relationships. To taste success in retail, it is important to build meaningful relationships with suppliers. An effective bi-directional relationship can optimise the supply and demand and the shipping phases resulting in improved efficiency.
It helps to optimise the inventory. To understand the supply chain of a company, it is important to keep in mind the total cost of the supply chain. Inventory is literally the money on your shelves, and continuously reviewing inventory levels can help you make sure that it balances with your business needs.
Good supply chain management can streamline the areas that are leaking money. It's worth taking a peek at your supply chain to cut down costs in these areas. For example, removing unwanted stages of distribution can help you fetch huge profits.
Delays can cause ruptures in customer relationships. Once you have implemented an efficient supply chain management, delays are not going to be a part of your shipping phase anymore. Every business operation can be coordinated and executed from top to bottom without any hassles.
Supply chain management enables visibility across the whole network. It helps users invigilate the entire supply chain status from data warehousing to tracking their orders in real-time.
Challenges and emerging trends are not new to the eCommerce business. To cope with these challenges, it is essential to stay updated. And the best way to do that is by building efficient supply chain management around your business. Use the tools mentioned in this post to help streamline the supply chain in your organisation. But using these tools and becoming successful will take a lot of effort and time. This is where Powerhouse91 can come to your aid. We have nearly 10+ years of experience building eCommerce brands and guiding several Indian companies in their growth journey. To know more about how we can help you, contact us today.